Labour Law

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Labour Law

The law now allows, as a general rule, the performance of temporary labour contracts in order to satisfy any transitory needs of the company and only for the required period of time to comply with those needs. The Code completes this general rule with an exemplificative catalogue of situations that can justify the employment of staff under a temporary labour contract.

Therefore, a transitory need of the company can be considered, namely:

- The direct or indirect replacement of an employee who is not able to render his services for some reason or in relation to whom there is a pending legal action concerning dismissal, as well as the replacement of an employee who is merely absent or benefiting from a non-remunerated license, or, moreover, of an employee who went from working full-time to half time;

- Seasonal activities or other activities with irregular cycles of production;

- Unusual increase of activity;

- The performance of occasional tasks or of determined, precise and non-lasting services;

- The performance of works, projects or other precise and temporary activities.

The Code now foresees other situations, which allows temporary employment, not necessarily related to transitory needs of the company, such as:

- The beginning of a new activity with an uncertain duration, or the start up of a company or establishment;

- Employment of workers looking for a first job or long time unemployed, and other situations of special employment policies.

It is employer’s responsibility to provide evidence for the facts that justify the temporary employment.

Labour contracts limited to a fixed period of time have to be written and signed by both parties and have to contain certain elements. It is necessary to indicate the motive for the temporary employment by describing the facts that integrate such motive, and it is also necessary to establish a relation between the motive and the period of duration of the contract.

Other elements such as the signature of both parties, their identification, as well as the dates of appointment and of termination, must be included in

the contract, otherwise it can be considered as a permanent contract and the employer will not be able to terminate it unilaterally.

Consecutive contracts

Termination, by the employer, of a temporary labour contract prevents a new admission of an employee, on a temporary basis, for the same job during a certain period of time. This period of time is now of one third of the duration of the contract (including renewals).

The Labour Code provides for certain exceptions to this rule:

- New absence of a replaced employee when the temporary contract had the purpose of replacing such employee;

- Unusual increase of activity after the termination of the temporary contract;

- Seasonal activities;

- When the employee was appointed, in the first place, when looking for a first job.

Should the consecutive contract be signed with the same employee without respect for the legal period of time above mentioned, the contract will be considered permanent and seniority will be calculated from the date when the employee was first admitted.

Should the employer wish to admit an employee to execute the same functions, under a contract without term, the employee, admitted previously on a temporary basis will have preference in the admission for such employment during 30 days after the termination of his contract, otherwise the employer may have to pay him compensation.

Time Limits

The new Labour Code continues to provide for a maximum duration of 3 years for temporary contracts, including renewals. However, now the Code admits the possibility to, at the end of those 3 years, (or after the maximum number of two renewals), to renew the contract for one more period of time which cannot be less than one year and greater than 3 years. Therefore the maximum time limit for temporary contracts is now 6 years with the limit of three renewals.

The duration of temporary labour contracts is more limited in cases where the motive for the term is the introduction of an activity of uncertain duration, the start-up of a company and long-term unemployment. In such cases the duration of the contract cannot exceed two years. Also in cases of employees looking for a first job the duration of the contract cannot exceed 18 months.

Labour contracts with a fixed term are subject to automatic renewal, at the end of the term, for an equal period of time. In case the limits of duration are exceeded, or the number of renewals, the contract will be considered permanent.

The near impossibility to execute temporary labour contracts for less than 6 months continues, i.e., only in cases of replacement of employee, increase of activity, seasonal activities and execution of occasional tasks is it possible to enter into this type of contracts.

Temporary labour contracts with an uncertain term are those contracts with no fixed period but subject to the completion of an activity.

Therefore, temporary labour contracts can only have an uncertain duration in the following situations: replacement of employee, seasonal activities and execution of occasional tasks or non-lasting services, unusual increase of activity and execution of works, projects or other defined and temporary activities.

A temporary contract with an uncertain duration has no limit of time, lasting for all the time of the maintenance of its motive. Therefore, the contract will only be considered permanent should the employee remain employed after the period of prior notice, if that is the case, or after 15 days from the conclusion of the activity for which he was appointed to (or from the return of the replaced employee).


Under the general provisions of the Labour Code concerning this matter, employees have a statutory right to a minimum of 22 days annual paid holiday. This right is acquired by the employee immediately upon the signature of the contract. However the right to take the annual leave is only effective as from the 1st of January of each civil year. During the employees’ first year of employment they have the right to 2 days of paid holiday for each month of employment (which an employee can only take after 6 months of consecutive work), up to a maximum of 20 days. If this leave cannot be taken by the employee up to the end of the first year it can be taken in the following year, however, the accumulation cannot lead to a period of holidays larger than 30 days on such following year.

Finally, a very important innovation in this new Labour Code concerning holidays is the possibility to increase the normal period of 22 days of paid holiday up to 25 days in case the employee has no absences from work or has only up to 3 justified absences.

Termination of temporary contracts

Temporary labour contracts terminate at the end of the agreed period by means of simple written notification from the employer with 15 days minimum notice to the date of termination (or 8 days in case of termination by the employee). Temporary agreements aimed at certain transitory jobs, with no fixed period but subject to the completion of the activity, require a prior notice by the employer 7, 30, or 60 days whether the agreement had a duration of respectively, 6 months, from 6 months to 2 years, or for a longer period.

The expiration of the contract resulting from the notification of the employer will entitle the employee to compensation corresponding to 3 or 2 days of remuneration for each month of duration of the contract, depending if the contract lasted for up to 6 months or more.


An employee appointed temporarily who wishes to terminate his contract before the end of the term can revoke the same by notifying the employer with a prior notice of 30 or of 15 days should the agreement have a duration of, respectively, 6 months or more, or less than 6 months.

By Marta Leitão of Abreu & Marques, Vinhas e Assoc .

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